10-year Treasury yield falls as investors consider Fed policy path

U.S. Treasury yields were mostly lower on Tuesday as investors scrutinized the Federal Reserve’s monetary policy outlook following the latest economic data and remarks from central bank officials.

The 10-year Treasury yield fell more than 3 basis points to 4.457%. The 2-year Treasury yield rose less than 1 basis point to 4.828%.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Investors have recently wondered when – and how often – the Fed will cut interest rates.

Minneapolis Federal Reserve President Neel Kashkari said Tuesday he expects the central bank to hold interest rates for an extended period until it gets more clarity on the disinflation, and did not rule out the possibility of a further rate hike.

On Monday, Richmond Federal Reserve President Tom Barkin said the central bank had time to wait until policymakers were more confident that inflation was falling before cutting rates. This was consistent with guidance provided by the Fed after its last meeting earlier this month.

Barkin’s comments come after a weaker-than-expected April jobs report released late last week revived hopes for a rate cut. The report showed that nonfarm payrolls increased by 175,000 during the month, far less than the previous estimate of 240,000, and the unemployment rate rose to 3.9% from 3.8%.

Other Fed policymakers are expected to make remarks throughout the week, which investors will watch closely for additional clues about the policy outlook. On the data side, information on consumer sentiment is expected at the end of the week.